The Options Risk Curve Part 1 by John A. Sarkett
If you’ve tried to make profits out of option decay, you may have found yourself waiting patiently to eek out even a bit of profit. Find out what some pros have to say about this.
You are sitting there admiring your freshly executed, income-generating options strategy. What a beau-tiful risk curve.
You have positive theta (options decay) coming your way from one or more of the following: calendars, butterflies, short calls, short puts, short verticals, short strangles, or short straddles.
Your brokerage platform’s “risk profile” tells you to expect a significant markup in your profit & loss (P/L) tomorrow. And an even bigger amount the next day ...